I think most analysts view inventories as a weak source of growth, unless they are reinforced by some signs of life in other aspects of demand. As you say, though, they might be a forward-looking indicator in some cases if firms are stocking up in expectation of upcoming demand. In this case, that would be a sunnier spin than I think most observers have on the data. But, to be honest, I am not sure folks have a good handle on the current evolution of the economy.

Looking ahead, we face the same set of issues: how will changes in the dollar and other factors affect the real value of exports and imports and how will their prices change.

Could you explain what it means to have exports contributing more to growth than imports detracted? Didn’t the trade imbalance expand from 09Q3 to 09Q4? Is it because the dollar was decreasing at the time? Should we expect that to turn around now that the dollar has grown stronger?

Thanks,

Trevor

With due respect, re: your Blog charts today, my experience in business has been to learn that investing in inventory is one of the greatest forms of taking risk. This should be highlighted, as more, than just stocking their shelves.

They have the choice of keeping their financial resources in the bank or not extending credit to risk in anticipation of predicted sales or dumping goods, at a possible loss.

This is a very good sign, actually.

Did you think this was already understood?

Because unless you’ve been in such a firm, one might not view the data you presented, in that light.

My very best,

Jonathan